Form 8-K

as tenants in common

UNIF GIFT MIN ACT - _________ Custodian _________

(Cust) (Minor)

as tenants by the entireties

Under Uniform Gifts to Minors

as joint tenants with right of

Survivorship and not as tenants in common

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LFuV2ONku2/hAjHjTDAb2VQpXVVeokMhQycNCGvsLDbxEzA7ymRXIsd8qC1aoX1r mgO+cB+nJLQcMgOYBA+VFw== 0001193125-07-235080.txt : 20071105 0001193125-07-235080.hdr.sgml : 20071105 20071105163012 ACCESSION NUMBER: 0001193125-07-235080 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20071031 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071105 DATE AS OF CHANGE: 20071105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEHMAN BROTHERS HOLDINGS INC CENTRAL INDEX KEY: 0000806085 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 133216325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09466 FILM NUMBER: 071214432 BUSINESS ADDRESS: STREET 1: LEHMAN BROTHERS STREET 2: 745 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125267000 MAIL ADDRESS: STREET 1: LEHMAN BROTHERS STREET 2: 745 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN HUTTON HOLDINGS INC DATE OF NAME CHANGE: 19901017 8-K 1 d8k.htm FORM 8-K Form 8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):

October 31, 2007

Lehman Brothers Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State of or other jurisdiction of incorporation)


1-9466		13-3216325
(Commission File Number)		(I.R.S. Employer Identification No.)

745 Seventh Avenue New York, New York		10019
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(212) 526-7000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 9.01.		Financial Statements and Exhibits

	(d)	Exhibits

The following Exhibit is incorporated by reference into Registration Statement on Form S-3 No. 333-134553 as an exhibit thereto and is filed as part of this Report.


4.01		Form of senior debt security—medium-term note (100% Principal Protection Absolute Return Barrier Notes Linked to the S&P 500^® Index)

4.02		Form of senior debt security—medium-term note (100% Principal Protection Barrier Notes Linked to the FTSE/Xinhua China 25 Index™ )

4.03		Form of senior debt security—medium-term note (100% Principal Protected Autocallable Absolute Return Barrier Notes Linked to the S&P 500^® Index)

4.04		Form of senior debt security—medium-term note (100% Principal Protection Enhanced Participation Notes Linked to an International Index Basket)

4.05		Form of senior debt security—medium-term note (Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index)

4.06		Form of senior debt security—medium-term note (Reverse Exchangeable Notes Linked to the Least Performing Common Stock in a Basket of Common Stocks)

4.07		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the S&P 500^® Index)

4.08		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the Nikkei 225^SM Index)

4.09		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the Nasdaq-100 Index^®)

4.10		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the Dow Jones EURO STOXX 50^® Index)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


LEHMAN BROTHERS HOLDINGS INC.
		(Registrant)

By:		/s/ James J. Killerlane III
		James J. Killerlane III
		Vice President

Date: November 5, 2007

EXHIBIT INDEX


Exhibit No.		Exhibits
4.01		Form of senior debt security—medium-term note (100% Principal Protection Absolute Return Barrier Notes Linked to the S&P 500^® Index)

4.02		Form of senior debt security—medium-term note (100% Principal Protection Barrier Notes Linked to the FTSE/Xinhua China 25 Index™ )

4.03		Form of senior debt security—medium-term note (100% Principal Protected Autocallable Absolute Return Barrier Notes Linked to the S&P 500^® Index)

4.04		Form of senior debt security—medium-term note (100% Principal Protection Enhanced Participation Notes Linked to an International Index Basket)

4.05		Form of senior debt security—medium-term note (Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index)

4.06		Form of senior debt security—medium-term note (Reverse Exchangeable Notes Linked to the Least Performing Common Stock in a Basket of Common Stocks)

4.07		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the S&P 500^® Index)

4.08		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the Nikkei 225^SM Index)

4.09		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the Nasdaq-100 Index^®)

4.10		Form of senior debt security—medium-term note (Return Optimization Securities Linked to the Dow Jones EURO STOXX 50^® Index)

EX-4.01 2 dex401.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.01

LEHMAN BROTHERS HOLDINGS INC.

100% Principal Protection Absolute Return Barrier Notes Linked to the S&P 500^® Index Due April 30, 2009


Number R-1		$38,850,000
ISIN US52522L2934		CUSIP 52522L293

See Reverse for Certain Definitions

THIS SECURITY (THIS “SECURITY”) IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private debts, for each $10 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

“Standard & Poor’s”, “S&P”, “S&P 500” and “Standard & Poor’s 500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Lehman Brothers Inc. and sub-licensed for use by the Company. The Securities, which are linked to the performance of the S&P 500^® Index, are not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.

IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has caused this instrument to be signed by its Chairman of the Board, its President, its Vice Chairman, its Chief Financial Officer, one of its Vice Presidents or its Treasurer, by manual or facsimile signature under its corporate seal, attested by its Secretary or one of its Assistant Secretaries by manual or facsimile signature.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as 100% Principal Protection Absolute Return Barrier Notes Linked to the S&P 500^® Index Due April 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

The Payment at Maturity, at the request of the Trustee, shall be determined by the Calculation Agent pursuant to the Calculation Agency Agreement. The Trustee shall fully rely on the determination by the Calculation Agent of the Payment at Maturity and shall have no duty to make any such determination. The Calculation Agent will provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Payment at Maturity on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date.

All calculations with respect to the Index Starting Level, the Index Ending Level, the Index Return or any Index Closing Level will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the payment per $10 principal amount Security on the Maturity Date will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Payment at Maturity with respect to this Security.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

The Company, the Trustee, and any agent of the Company or of the Trustee may deem and treat the registered holder (the “Holder”) hereof as the absolute owner of this Security (whether or not this Security shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the purpose of receiving payment hereof, or on account hereof, and for all other purposes and neither the Company nor the Trustee nor any agent of the Company or of the Trustee shall be affected by any notice to the contrary. All such payments made to or upon the order of such registered holder shall, to the extent of the sum or sums paid, effectually satisfy and discharge liability for moneys payable on this Security.

such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the Corporate Trust Office or agency in a Place of Payment for this Security, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities of this series or of like tenor and of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Company agrees, and by acceptance of a beneficial ownership interest in the Securities, each Holder will be deemed to have agreed, for United States federal income tax purposes, (i) to treat the Securities as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the “Contingent Payment Regulations”) and (ii) to be bound by the Company’s determination of the “comparable yield” and “projected payment schedule,” within the meaning of the Contingent Payment Regulations, with respect to the Securities. The Company has determined that the comparable yield is an annual rate of 4.595%, compounded semi-annually. Based on the comparable yield, the projected payment schedule per $10 principal amount Security is $10.71 due at maturity.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Absolute Index Return” as calculated by the Calculation Agent, is the absolute value, of the following:

Index Ending Level — Index Starting Level

Index Starting Level

“Business Day”, notwithstanding any provision in the Indenture, shall mean any day that is not a Saturday or Sunday and that is not a day on which banking institutions in the City of New York are authorized or obligated by law to close.

“Calculation Agency Agreement” shall mean the Calculation Agency Agreement, dated as of December 21, 2006 between the Company and the Calculation Agent, as amended from time to time, or any successor calculation agency agreement.

“Calculation Agent” shall mean the person that has entered into an agreement with the Company providing for, among other things, the determination of the Payment at Maturity, which term shall, unless the context otherwise requires, include its successors and assigns. The initial Calculation Agent shall be Lehman Brothers Inc.

“Closing Price” of a security, on any particular day, means the last reported sales price for that security on the Relevant Exchange at the scheduled weekday closing time of the regular trading session of the Relevant Exchange. If, however, the security is not listed or traded on a bulletin board, then the Closing Price of the security will be determined using the average execution price per share that an affiliate of the Company pays or receives upon the purchase or sale of the security used to hedge the Company’s obligations under the Securities.

“Company” shall have the meaning set forth on the face of this Security.

“Final Valuation Date” shall mean April 27, 2009. If the Final Valuation Date is not a Trading Day or if there is a Market Disruption Event on such day, the applicable Final Valuation Date will be the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred or is continuing; provided, however, that the Index Closing Level will not be determined on a date later than the eighth scheduled Trading Day after the scheduled Final Valuation Date, and if such day is not a Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent will determine the Index Closing Level on such date in accordance with the formula for and method of calculating the Index Closing Level last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth scheduled Trading Day of each security most recently constituting the Index.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the S&P 500^® Index, as calculated, published and disseminated by S&P.

“Index Closing Level”, as determined by the Calculation Agent, shall mean, with respect to any Trading Day, the closing level of the Index or the Successor Index, as the case may be, at the regular official weekday close of the principal trading session of the Relevant Exchange or market for the Index or the Successor Index, as the case may be, on such day, or as determined by the Calculation Agent pursuant to the Calculation Agency Agreement as described below under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Ending Level” shall equal the Index Closing Level on the Final Valuation Date.

“Index Sponsor” with respect to the Index shall be S&P. The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Starting Level” shall equal 1,535.28.

“Lower Index Barrier” shall equal 1,125.36.

“Market Disruption Event”, with respect to the Index or any Successor Index shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(1) a suspension, absence or material limitation of trading of stocks then constituting 20% or more of the level of the Index (or the relevant Successor Index) on the Relevant Exchanges for such securities at any time during the one hour period preceding the close of the principal trading session on such Relevant Exchange;

(2) a breakdown or failure in the price and trade reporting systems of any Relevant Exchange as a result of which the reported trading prices for stocks then constituting 20% or more of the level of the Index (or the relevant Successor Index) at any time during the one hour period preceding the close of the principal trading session on such Relevant Exchange are materially inaccurate;

(3) a suspension, absence or material limitation of trading on any major securities exchange for trading in futures or options contracts or exchange traded funds related to the Index (or the relevant Successor Index) at any time during the one hour period preceding the close of the principal trading session on such exchange; or

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

For the purpose of determining whether a Market Disruption Event exists at any time, if trading in a security included in the Index is materially suspended or materially limited at that time, then the relevant percentage contribution of that security to the level of the Index shall be based on a comparison of:

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

(1) a limitation on the hours or number of days of trading will not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the Relevant Exchange or market;

(2) limitations pursuant to the rules of any Relevant Exchange similar to NYSE Rule 80B (or any applicable rule or regulation enacted or

promulgated by any other self-regulatory organization or any government agency of scope similar to NYSE Rule 80B as determined by the Calculation Agent in its sole discretion) on trading during significant market fluctuations will constitute a suspension, absence or material limitation of trading;

(3) a suspension of trading in futures or options contracts on the Index by the primary securities market trading in such contracts by reason of (i) a price change exceeding limits set by such exchange or market, (ii) an imbalance of orders relating to such contracts, or (iii) a disparity in bid and ask quotes relating to such contracts, will, in each such case, constitute a suspension, absence or material limitation of trading in futures or options contracts related to the Index; and

(4) a suspension, absence or material limitation of trading on any Relevant Exchange or on the primary market on which futures or options contracts related to the Index are traded will not include any time when such market is itself closed for trading under ordinary circumstances.

“Maturity Date” shall mean April 30, 2009, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity will be made on the next succeeding Business Day following April 30, 2009; provided however, that if due to a non-Trading Day or a Market Disruption Event, the Final Valuation Date is postponed so that it falls fewer than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Final Valuation Date, as postponed.

“NYSE” shall mean The New York Stock Exchange, Inc.

“Observation Period” shall mean the period commencing on the Pricing Date and extending to and including the Final Valuation Date.

“Payment at Maturity”, as calculated by the Calculation Agent, for each $10 principal amount Security shall equal:

•

If the Index Closing Level on any Trading Day during the Observation Period was never above the Upper Index Barrier or below the Lower Index Barrier, $10 + ($10 × Absolute Index Return).

•

If the Index Closing Level on any Trading Day during the Observation Period was above the Upper Index Barrier or below the Lower Index Barrier, $10.

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Relevant Exchange” shall mean, for any security (or any combination thereof) then included in the Index or any Successor Index, the primary exchange, quotation system (which includes bulletin board services) or other market of trading for such security.

“S&P” shall mean Standard & Poor’s, a division of McGraw-Hill, Inc.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted on (i) the Relevant Exchanges for securities underlying the Index and (ii) the exchanges on which futures or options contracts related to the Index are traded, other than a day on which trading on such Relevant Exchange or exchange on which such securities, futures or options contracts are traded is scheduled to close prior to its scheduled weekday closing time.

“Trustee” shall have the meaning set forth on the reverse of this Security.

“Upper Index Barrier” shall equal 1,945.20.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things, the Index Starting Level, the Index Closing Level on each Trading Day during the Observation Period, the Index Ending Level, the Index Return and the Payment at Maturity, if any. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event or a discontinuation of the Index, and whether there has been a material change in the method of calculation of the Index. All calculations, determinations or adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and on the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Discontinuation of the Index; Alteration of Method of Calculation

If the Index Sponsor discontinues publication of the Index and the Index Sponsor or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued Index (a “Successor Index”), then any Index Closing Level will be determined by reference to the level of such Successor Index at the close of trading on the Relevant Exchange or market for the Successor Index on any Trading Day. Upon any selection by the Calculation Agent of a Successor Index, the Calculation Agent will cause written notice thereof to be promptly furnished to the Trustee, to the Company and to the Holders.

If the Index Sponsor discontinues publication of the Index, and such discontinuation is continuing on any Trading Day, and the Calculation Agent determines, in its

sole discretion, that no Successor Index is available at such time, or if the Calculation Agent has previously selected a Successor Index and publication of such Successor Index is discontinued, and such discontinuation is continuing on any Trading Day, or if the Index Sponsor (or the publisher of any Successor Index) fails to calculate and publish an Index Closing Level for the Index (or any Successor Index) on any date when it would ordinarily do so in accordance with its customary practice, then the Calculation Agent will determine the Index Closing Level for such Trading Day or such date. The Index Closing Level will be computed by the Calculation Agent in accordance with the formula for and method of calculating the Index or Successor Index, as applicable, last in effect on the date prior to such discontinuation or failure to calculate or publish an Index Closing Level for the Index or Successor Index, as applicable, using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation) at the close of the principal trading session on such date of each security most recently included in the Index or Successor Index, as applicable.

If at any time the method of calculating the Index or a Successor Index, or the level thereof, is changed in a material respect, or if the Index or a Successor Index is in any other way modified so that the Index or such Successor Index does not, in the opinion of the Calculation Agent, fairly represent the level of the Index or such Successor Index in the absence of such changes or modifications, then the Calculation Agent will, at the close of business in New York City on each date on which the Index Closing Level is to be determined, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a level of a stock index comparable to the Index or such Successor Index, as the case may be, as if such changes or modifications were not made, and the Calculation Agent will calculate the Index Closing Level with reference to the Index or such Successor Index, as adjusted. Accordingly, if the method of calculating the Index or a Successor Index is modified so that the level of the Index or such Successor Index is a fraction of what it would have been if there had been no such modification (e.g., due to a split in the Index), then the Calculation Agent will adjust its calculation of the Index or such Successor Index in order to arrive at a level of the Index or such Successor Index as if there had been no such modification (e.g., as if such split had not occurred).

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR

OTHER IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Security in every particular, without alteration or enlargement or any change whatever.

Signature(s) Guaranteed:

__________________________

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

EX-4.02 3 dex402.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.02

LEHMAN BROTHERS HOLDINGS INC.

100% Principal Protection Barrier Notes Linked to the to the FTSE/Xinhua China 25 Index™ Due January 30, 2009


Number R-1		$25,000,000
ISIN US52522L4005		CUSIP 52522L400

See Reverse for Certain Definitions

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, or Call Settlement Date, if applicable, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private debts, for each $10 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER

PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

“FTSE^®”, “Xinhua^®” and “FTSE/Xinhua China 25 Index™” are trademarks of FTSE/Xinhua Index Limited (“FXI”), a joint venture of FTSE Group and Xinhua Finance and will be licensed for use by Lehman Brothers Holdings Inc. The Securities, which are linked to the performance of the FTSE/Xinhua China 25 Index™, are not sponsored, endorsed, sold or promoted by FXI, and FXI makes no representation regarding the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as 100% Principal Protection Barrier Notes Linked to the FTSE/Xinhua China 25 Index™ Due January 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

All calculations with respect to the Index Ending Level, the Index Return or any Index Closing Level will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the payment per $10 principal amount Security on the Maturity Date or Call Settlement Date, if any, will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to ..7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

The Company agrees, and by acceptance of a beneficial ownership interest in the Securities, each Holder will be deemed to have agreed, for United States federal income tax purposes, (i) to treat the Securities as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the “Contingent Payment Regulations”) and (ii) to be bound by the Company’s determination of the “comparable yield” and “projected payment schedule,” within the meaning of the Contingent Payment Regulations, with respect to the Securities. The Company has determined that the comparable yield is an annual rate of 4.4975%, compounded semi-annually. Based on the comparable yield, the projected payment schedule per $10 principal amount Security is $10.57 due at maturity.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Additional Amount”, as calculated by the Calculation Agent, per $10 principal amount Security paid at maturity shall equal:

•

If the Index Closing Level is never above the Index Barrier on any Trading Day during the Observation Period and the Index Return is positive: $10 × the Index Return × the Participation Rate;

•

If the Index Closing Level is never above the Index Barrier on any Trading Day during the Observation Period and the Index Return is zero or negative: $0:

•

If the Index Closing Level is above the Index Barrier on any Trading Day during the Observation Period: $10 × the Conditional Coupon Rate.

“Company” shall have the meaning set forth on the face of this Security.

“Conditional Coupon Rate” shall equal 4.00%.

“Final Valuation Date” shall mean January 27, 2009. If the Final Valuation Date is not a Trading Day or if there is a Market Disruption Event on such day, the applicable Final Valuation Date will be the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred or is continuing; provided, however, that the Index Closing Level will not be determined on a date later than the eighth scheduled Trading Day after the scheduled Final Valuation Date, and if such day is not a Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent will determine the Index Closing Level on such date in accordance with the formula for and method of calculating the Index Closing Level last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth scheduled Trading Day of each security most recently constituting the Index.

“FXI” means FTSE/Xinhua Index Limited, a joint venture of FTSE Group and Xinhua Finance.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the FTSE/Xinhua China 25 Index™, as calculated, published and disseminated by FXI.

“Index Barrier” shall equal 42,589.33.

“Index Ending Level” shall equal the Index Closing Level on the Final Valuation Date.

“Index Return”, as calculated by the Calculation Agent, shall equal:

Index Ending Level — Index Starting Level

Index Starting Level

“Index Sponsor” with respect to the Index shall be FXI. The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Starting Level” shall equal 29,782.75.

“Market Disruption Event”, with respect to the Index or any Successor Index shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

(2) limitations pursuant to the rules of any Relevant Exchange similar to NYSE Rule 80B (or any applicable rule or regulation enacted or promulgated by any other self-regulatory organization or any government agency of scope similar to NYSE Rule 80B as determined by the Calculation Agent in its sole discretion) on trading during significant market fluctuations will constitute a suspension, absence or material limitation of trading;

“Maturity Date” shall mean January 30, 2009, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity will be made on the next succeeding Business Day following January 30, 2009; provided however, that if due to a non-Trading Day or a Market Disruption Event, the Final Valuation Date is postponed so that it falls fewer than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Final Valuation Date, as postponed.

“NYSE” shall mean The New York Stock Exchange, Inc.

“Observation Period” shall mean the period commencing on (and including) the Pricing Date and extending to and including the Final Valuation Date.

“Participation Rate” shall equal 100%.

“Payment at Maturity”, as calculated by the Calculation Agent, shall equal a cash payment, per $10 principal amount Security, of $10 plus the Additional Amount (which may be zero).

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Return Barrier” shall equal 43.00%

“Securities” shall have the meaning set forth on the reverse of this Security.

“Trustee” shall have the meaning set forth on the reverse of this Security.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things, the Index Closing Level on each Trading Day during the Observation Period, the Index Ending Level, the Index Return and the Payment at Maturity. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event or a discontinuation of the Index, and whether there has been a material change in the method of calculation of the Index. All calculations, determinations or adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and on the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Discontinuation of the Index; Alteration of Method of Calculation

If the Index Sponsor discontinues publication of the Index, and such discontinuation is continuing on any Trading Day, and the Calculation Agent determines, in its sole discretion, that no Successor Index is available at such time, or if the Calculation Agent has previously selected a Successor Index and publication of such Successor Index is discontinued, and such discontinuation is continuing on any Trading Day, or if the Index Sponsor (or the publisher of any Successor Index) fails to calculate and publish an Index Closing Level for the Index (or any Successor Index) on any date when it would ordinarily do so in accordance with its customary practice, then the Calculation Agent will determine the Index Closing Level for such Trading Day or such date. The Index Closing Level will be computed by the Calculation Agent in accordance with the formula for and method of calculating the Index or Successor Index, as applicable, last in effect on the date prior to such discontinuation or failure to calculate or publish an Index Closing Level for the Index or Successor Index, as applicable, using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation) at the close of the principal trading session on such date of each security most recently included in the Index or Successor Index, as applicable.

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.03 4 dex403.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.03

LEHMAN BROTHERS HOLDINGS INC.

100% Principal Protection Autocallable Absolute Return Barrier Notes Linked to the S&P 500^® Index Due October 24, 2008


Number R-1		$3,305,000
ISIN US52517P7M71		CUSIP 52517P7M7

See Reverse for Certain Definitions

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, or Call Settlement Date, if applicable, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private debts, for each $1,000 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity or amount due upon an Automatic Call, if applicable. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

Any amount payable on the Maturity Date or upon an Automatic Call, if applicable, hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER

PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as 100% Principal Protection Autocallable Absolute Return Barrier Notes Linked to the S&P 500^® Index Due October 24, 2008 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

The Payment at Maturity or amount due upon an Automatic Call, if applicable, at the request of the Trustee, shall be determined by the Calculation Agent pursuant to the Calculation Agency Agreement. The Trustee shall fully rely on the determination by the Calculation Agent of the Payment at Maturity or amount due upon an Automatic Call, if applicable, and shall have no duty to make any such determination. The Calculation Agent will provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Payment at Maturity or amount due upon an Automatic Call, if applicable, on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date or applicable Call Settlement Date.

All calculations with respect to the Index Starting Level, the Index Ending Level, the Index Return or any Index Closing Level will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the payment per $1,000 principal amount Security on the Maturity Date or Call Settlement Date, if any, will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Securities are issuable in denominations of $1,000 and any whole multiples of $1,000.

No recourse for the payment of the principal of, premium, if any, or interest on this Security, or for any claim based hereon or otherwise in respect hereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or any indenture supplemental thereto or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Absolute Index Return” as calculated by the Calculation Agent, is the absolute value, of the following:

Index Ending Level — Index Starting Level

Index Starting Level

An “Automatic Call” occurs if the Index Closing Level on any Trading Day during the Observation period is above the Upper Index Barrier or below the lower Index Barrier. Upon the occurrence of an Automatic Call, the Securities will be automatically called for a Payment upon Automatic Call.

If the Securities are subject to an Automatic Call at any time during the Observation Period other than the Final Valuation Date, the Holders will receive Payment upon Automatic Call. If the Securities are subject to an Automatic Call on the Final Valuation Date, the Holders will receive a cash payment of $1,000 for each $1,000 principal amount Security on the Maturity Date.

“Call Settlement Date” shall mean, the third Business Day following the date an Automatic Call occurs, if applicable.

“Company” shall have the meaning set forth on the face of this Security.

“Index Ending Level” shall equal the Index Closing Level on the Final Valuation Date.

“Final Valuation Date” shall mean October 21, 2008. If the Final Valuation Date is not a Trading Day or if there is a Market Disruption Event on such day, the applicable Final Valuation Date will be the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred or is continuing; provided, however, that the Index Closing Level will not be determined on a date later than the eighth scheduled Trading Day after the scheduled Final Valuation Date, and if such day is not a Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent will determine the Index Closing Level on such date in accordance with the formula for and method of calculating the Index Closing Level last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth scheduled Trading Day of each security most recently constituting the Index.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the S&P 500^® Index, as calculated, published and disseminated by S&P.

“Index Sponsor” shall mean S&P.

“Index Starting Level” shall equal 1,535.28.

“Lower Index Barrier” shall equal 1,304.99.

“Market Disruption Event”, with respect to the Index or any Successor Index shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

“Maturity Date” shall mean October 24, 2008, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity will be made on the next succeeding Business Day following October 24, 2008; provided however, that if due to a non-Trading Day or a Market Disruption Event, the Final Valuation Date is postponed so that it falls fewer than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Final Valuation Date, as postponed.

“NYSE” shall mean The New York Stock Exchange, Inc.

“Observation Period” shall mean the period commencing on the Pricing Date and extending to and including the Final Valuation Date.

“Payment upon Automatic Call”, shall mean a cash payment of $1,000 for each $1,000 principal amount Security on the Call Settlement Date.

“Payment at Maturity”, as calculated by the Calculation Agent and if the Securities are not called pursuant to an Automatic Call, for each $1,000 principal amount Security shall equal:

$1,000 + ($1,000 × Absolute Index Return)

“Place of Payment” shall mean the place or places where the Payment at Maturity or amount due upon an Automatic Call, if applicable, on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Trustee” shall have the meaning set forth on the reverse of this Security.

“Upper Index Barrier” shall equal 1,765.57.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things, the Index Starting Level, the Index Closing Level on each Trading Day during the Observation Period, whether the Automatic Call feature has triggered a mandatory redemption, the Index Ending Level, the Index Return if the Securities are not automatically called, the Call Price and the Payment at Maturity, if any. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event or a discontinuation of the Index, and whether there has been a material change in the method of calculation of the Index. All calculations, determinations or adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and on the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Discontinuation of the Index; Alteration of Method of Calculation

close of trading on the Relevant Exchange or market for the Successor Index on any Trading Day. Upon any selection by the Calculation Agent of a Successor Index, the Calculation Agent will cause written notice thereof to be promptly furnished to the Trustee, to the Company and to the Holders.

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.04 5 dex404.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.04

LEHMAN BROTHERS HOLDINGS INC.

100% Principal Protection Enhanced Participation Notes Linked to an International Index Basket Due October 31, 2012


Number R-1		$119,000
ISIN US52517P6Z93		CUSIP 52517P6Z9

See Reverse for Certain Definitions

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private debts, for each $1,000 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

Each Basket Index is a mark of the sponsor of such Basket Index and has been licensed for use by the Company. The Securities, linked to the performance of the Basket Indices, are not sponsored, endorsed, sold or promoted by the sponsors of the Basket Indices and the sponsors of the Basket Indices make no representation regarding the advisability of investing in the Securities.

This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as 100% Principal Protection Enhanced Participation Notes Linked to an International Index Basket Due October 31, 2012 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

All calculations with respect to the Basket Ending Level and the Basket Return (including each Index Return) will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the Additional Amount payable at maturity, if any, per $1,000 principal amount Security will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to $1,000 plus the Additional Amount. The Additional Amount will be calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Final Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $1,000 and any whole multiples of $1,000.

The Company agrees, and by acceptance of beneficial ownership interest in the Securities, each Holder will be deemed to have agreed, for United States federal income tax purposes, (i) to treat the Securities as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the “Contingent Payment Regulations”) and (ii) to be bound by the Company’s determination of the “comparable yield” and “projected payment schedule,” within the meaning of the Contingent Payment Regulations, with respect to the Securities. The Company has determined that the comparable yield is an annual rate of 5.355%, compounded semiannually. Based on the comparable yield, the projected payment schedule per $1,000 principal amount Security is $1,302.43 due at maturity.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Additional Amount”, as calculated by the Calculation Agent, per $1,000 principal amount Security paid at maturity shall equal the product of $1,000 × the Basket Return × the Participation Rate; provided, however, that if the Basket Return is less than zero, then the Additional Amount shall equal $0.

“Basket” shall mean the basket consisting of four Basket Indices to which the Securities are linked.

“Basket Ending Level”, as calculated by the Calculation Agent on the Final Valuation Date, is equal to the following:

Basket Starting Level × [1 + (the sum of (Index Return × Index Weighting) for all Basket Indices)]

“Basket Index” shall refer to each of the Dow Jones EURO STOXX 50^® Index, FTSE 100 Index^®, the Nikkei 225^SM Index and the S&P^®/ASX 200 Index (and, together, the “Basket Indices”) or any successor to any of the foregoing.

“Basket Index Sponsor” with respect to each Basket Index shall be as follows: (A) Dow Jones EURO STOXX 50^® Index, STOXX Limited, (B) FTSE 100 Index^®, FTSE International Limited, (C) Nikkei 225^SM Index, Nikkei Inc. (D) S&P^®/ASX 200 Index, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Calculation Agent, in its sole discretion, may select new Index Sponsors as described under “Discontinuation of a Basket Index; Alteration of Method of Calculation.”

“Basket Return” as calculated by the Calculation Agent, is calculated as follows:

Basket Ending Level — Basket Starting Level

Basket Starting Level

“Basket Starting Level” equals 100.

“Company” shall have the meaning set forth on the face of this Security.

“Final Valuation Date” shall mean October 26, 2012; provided, however, that if the Final Valuation Date is not a Trading Day or if there is a Market Disruption Event on such day, with respect to a Basket Index, the Calculation Agent will:

•

with respect to each Basket Index for which such day is a Trading Day and for which a Market Disruption Event has not occurred, determine the closing level of such Basket Index for use in calculating the Basket Index Ending Level by reference to the closing level of such Basket Index on that Trading Day; and

•

with respect to each Basket Index for which such day is not a Trading Day or for which a Market Disruption Event has occurred, determine the closing level of such Basket Index for use in calculating the Basket Index Ending Level by reference to the closing level of such Basket Index on the next Trading Day for such Basket Index on which there is not a Market Disruption Event; provided, however, if a Market Disruption Event with respect to such Basket Index occurs on each of the eight Trading Days following the originally scheduled Final Valuation Date, then the Calculation Agent shall determine the closing level of such Basket Index for use in calculating the Basket Index Ending Level in accordance with the formula for and method of calculating the closing index level of such Basket Index last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the closing price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the closing price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth scheduled Trading Day of each security most recently included in the Basket Index.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index Closing Level”, as determined by the Calculation Agent, shall mean, with respect to any Trading Day, the closing level of any Basket Index or any Successor Index, as the case may be, at the regular official weekday close of the principal trading session of the Relevant Exchange or market for the Index or the Successor Index, as the case may be, on such day, or as determined by the Calculation Agent pursuant to the Calculation Agency Agreement as described below under “Discontinuation of a Basket Index; Alteration of Method of Calculation.”

“Index Return”, as calculated by the Calculation Agent, is calculated as follows for each Basket Index:

Index Ending Level — Index Starting Level

Index Starting Level

The “Index Starting Level” for each of the four Basket Indices is as follows:


Dow Jones EURO STOXX 50^® Index		4,440.23
FTSE 100 Index^®		6,661.30
Nikkei 225^SM Index		16,505.63
S&P^®/ASX 200 Index		6,700.60

“Index Ending Level” shall equal the Index Closing Level of the relevant Basket Index on the Final Valuation Date.

“Index Weightings” shall mean the weighting for the Basket Indices (each an “Index Weighting”). The Index Weightings of the four Basket Indices are as follows:


Dow Jones EURO STOXX 50^® Index	36.80	%
FTSE 100 Index^®	31.30	%
Nikkei 225^SM Index	22.70	%
S&P^®/ASX 200 Index	9.20	%

“Market Disruption Event”, with respect to any of the Basket Indices (or any Successor Index) shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(1) a suspension, absence or material limitation of trading of stocks then constituting 20% or more of the level of such Basket Index (or the relevant Successor Index) on the Relevant Exchanges for such securities at any time during the one hour period preceding the close of the principal trading session on such Relevant Exchange;

(2) a breakdown or failure in the price and trade reporting systems of the primary market of any Relevant Exchange as a result of which the reported trading prices for stocks then constituting 20% or more of the level of such Basket Index (or the relevant Successor Index) at any time during the one hour period preceding the close of the principal trading session on such Relevant Exchange are materially inaccurate;

(3) a suspension, absence or material limitation of trading on any major securities exchange for trading in futures or options contracts or exchange traded funds related to

such Basket Index (or the relevant Successor Index) at any time during the one hour period preceding the close of, the principal trading session on such exchange; or

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds;

For the purpose of determining whether a Market Disruption Event exists at any time, if trading in a security included in a Basket Index is materially suspended or materially limited at that time, then the relevant percentage contribution of that security to the level of such Basket Index shall be based on a comparison of:

(1) the portion of the level of such Basket Index attributable to that security relative to

(2) the overall level of such Basket Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

(3) a suspension of trading in futures or options contracts on the Basket Index by the primary securities market trading in such contracts by reason of (i) a price change exceeding limits set by such exchange or market, (ii) an imbalance of orders relating to such contracts, or (iii) a disparity in bid and ask quotes relating to such contracts, will, in each such case, constitute a suspension, absence or material limitation of trading in futures or options contracts related to the Basket Index; and

(4) a suspension, absence or material limitation of trading on any Relevant Exchange or on the primary market on which futures or options contracts related to the Basket Index are traded will not include any time when such market is itself closed for trading under ordinary circumstances.

“Maturity Date” shall mean October 31, 2012, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity that would otherwise be made on the scheduled Maturity Date will instead be due on the next succeeding Business Day following such scheduled Maturity Date, with the same effect as if paid on the scheduled Maturity Date; provided, that if due to a non-Trading Day or a Market Disruption Event, the Final Valuation Date is postponed so that it falls less than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Final Valuation Date, as postponed.

“NYSE” shall mean The New York Stock Exchange, Inc.

“Participation Rate” shall equal 121.40%.

“Payment at Maturity”, as calculated by the Calculation Agent, shall equal a cash payment per $1,000 principal amount Security of $1,000 plus the Additional Amount (which may be zero).

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Relevant Exchange” shall mean, for any security then included in any Basket Index or any Successor Index, the primary exchange, quotation system (which includes bulletin board services) or other market of trading for such security.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Successor Index” shall have the meaning specified under “Discontinuation of a Basket Index; Alteration of Method of Calculation” with respect to each Basket Index.

“Trade Date” shall mean October 26, 2007.

“Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted on (i) the Relevant Exchanges for securities included in the Basket Indices (or the relevant Successor Indices) and (ii) the exchanges on which futures or options contracts related to the Basket Indices are traded, other than a day on which trading is scheduled to close prior to its regular weekday closing time.

“Trustee” shall have the meaning set forth on the reverse of this Security.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things, the Basket Ending Level, the Basket Return, the Index Return for each Basket Index, the Additional Amount, if any, the amount that we will pay you at maturity, as well as whether the Basket Ending Level is equal to or greater than the Basket Starting Level. The Calculation Agent will also be responsible for determining whether a Market Disruption Event has occurred, whether any of the Basket Indices has been discontinued, whether there has been a material change in the method of calculation of any of the Basket Indices. All calculations, determinations and adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and on the Company.

The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Discontinuation of a Basket Index; Alteration of Method of Calculation

If a Basket Index Sponsor discontinues publication of the related Basket Index and such Basket Index Sponsor or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued Basket Index (a “Successor Index”), then the Index Closing Level of such Basket Index will be determined by reference to the level of such Successor Index at the close of trading on the Relevant Exchange or market for the Successor Index on any Trading Day. Upon any selection by the Calculation Agent of a Successor Index, the Calculation Agent will cause written notice thereof to be promptly furnished to the Trustee, to the Company and to the Holders.

If a Basket Index Sponsor discontinues publication of the related Basket Index, and such discontinuation is continuing on any Trading Day, and the Calculation Agent determines, in its sole discretion, that no Successor Index for such Basket Index is available at such time, or if the Calculation Agent has previously selected a Successor Index for such Basket Index and publication of such Successor Index is discontinued, and such discontinuation is continuing on any Trading Day, or if the Basket Index Sponsor (or the publisher of any Successor Index) fails to calculate and publish an Index Closing Level for such Basket Index (or any Successor Index) on any date when it would ordinarily do so in accordance with its customary practice, then the Calculation Agent will determine such Index Closing Level for such Trading Day or such date. The Index Closing Level for such Basket Index will be computed by the Calculation Agent in accordance with the formula for and method of calculating the Basket Index or Successor Index, as applicable, last in effect on the date prior to such discontinuation or failure to calculate or publish an Index Closing Level for the Basket Index or Successor Index, as applicable, using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation) at the close of the principal trading session on such date of each security most recently included in the Basket Index or Successor Index, as applicable.

If at any time the method of calculating the Basket Index or a Successor Index, or the level thereof, is changed in a material respect, or if the Basket Index or a Successor Index is in any other way modified so that the Basket Index or such Successor Index does not, in the opinion of the Calculation Agent, fairly represent the level of the Basket Index or such Successor Index in the absence of such changes or modifications, then the Calculation Agent will, at the close of business in New York City on each date on which the Index Closing Level for such Basket Index is to be determined, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a level of a stock index comparable to the Basket Index or such Successor Index, as the case may be, as if such changes or modifications were not made, and the Calculation Agent will calculate the Index Closing Level with reference to the Basket Index or such Successor Index, as adjusted. Accordingly, if the method of calculating the Basket Index or a Successor Index is modified so that the level of the Basket Index or such Successor Index is a fraction of what it would have been if there had been no such modification (e.g., due to a split in the Index), then the Calculation Agent will adjust its calculation of the Basket Index or such Successor Index in order to arrive at a level of the Basket Index or the Successor Index as if there had been no such modification (e.g., as if such split had not occurred).

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.05 6 dex405.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.05

LEHMAN BROTHERS HOLDINGS INC.

Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index Due April 30, 2009


Number R-1		$3,825,970
ISIN US52522L3841		CUSIP 52522L384

See Reverse for Certain Definitions

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

“Standard & Poor’s^®,” “S&P^®,” and “S&P 500^®,” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Lehman Brothers Holdings Inc. Lehman Brothers Holdings Inc. will enter into a non-exclusive license agreement with Standard & Poor’s for use of “S&P 500^® Financials,” which is also a trademark of The McGraw-Hill Companies, Inc. The Securities, which are linked to the performance of the S&P 500^® Financials Index, are not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index Due April 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

The Payment at Maturity at the request of the Trustee shall be determined by the Calculation Agent pursuant to the Calculation Agency Agreement. The Trustee shall fully rely on the determination by the Calculation Agent of the Payment at Maturity and shall have no duty to make any such determination. The Calculation Agent will provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Payment at Maturity on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date.

All calculations with respect to the Index Ending Level and the Index Return or any Index Closing Level will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., ..876545 would be rounded to .87655); all dollar amounts related to determination of the payment per $10 principal amount Security at maturity will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a cash-settled financial contract, rather than as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Company” shall have the meaning set forth on the face of this Security.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the S&P 500^® Financials Index, as calculated, published and disseminated by S&P.

“Index Ending Level” shall equal the Index Closing Level on the Valuation Date.

“Index Return”, as calculated by the Calculation Agent, is calculated as follows:

Index Ending Level — Index Starting Level

Index Starting Level

“Index Starting Level” shall equal 451.50.

“Index Sponsor” with respect to the Index shall be S&P’s. The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Leverage Factor” shall equal 2.

“Market Disruption Event”, with respect to the Index or any Successor Index, shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(3) a suspension, absence or material limitation of trading on any major securities exchange for trading in futures or options contracts or exchange traded

funds related to the Index (or the relevant Successor Index) at any time during the one hour period preceding the close of the principal trading session on such exchange; or

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

“Maturity Date” shall mean April 30, 2009, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity that would otherwise be due on the

scheduled Maturity Date will instead be due on the next succeeding Business Day following such scheduled Maturity Date, with the same effect as if paid on the scheduled Maturity Date; provided that if due to a non-Trading Day or a Market Disruption Event, the Valuation Date is postponed so that it falls less than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Valuation Date, as postponed.

“Payment at Maturity”, as calculated by the Calculation Agent for each $10 principal amount Security, shall equal:

•

If the Index Return is positive, the lesser of:

(1) $10 + ($10 × Index Return × Leverage Factor); and

(2) $12.65

•

If the Index Return is equal to or less than 0% and equal to or greater than -10%: $10

•

If the Index Return is less than 10%: $10 + [$10 × (Index Return + 10%)].

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Relevant Exchange” for any security (or any combination thereof) then included in the Index or any Successor Index, shall mean the primary exchange, quotation system (which includes bulletin board services) or other market of trading for such security.

“S&P” shall mean Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Successor Index” shall have the meaning specified under “Discontinuation of the Index; Alteration of Method of Calculation”.

“Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted (i) on the Relevant Exchanges for securities included in the Index (or the relevant Successor Index) and (ii) the exchanges on which futures or options contracts related to the Index (or the relevant Successor Index) are traded, other than a day on which trading on such Relevant Exchange or exchange on which such securities, futures or options contracts are traded is scheduled to close prior to its scheduled weekday closing time.

“Trustee” shall have the meaning set forth on the reverse of this Security.

“Valuation Date” shall mean April 27, 2009; provided, however, that if the scheduled Valuation Date is not a Trading Day or if there is a Market Disruption Event on such day, the Valuation Date shall be postponed to the immediately succeeding Trading Day during which no Market Disruption Event shall have occurred or shall be continuing; provided, however, that

the Index Ending Level for the Valuation Date shall not be determined on a date later than the eighth scheduled Trading Day after the originally scheduled Valuation Date, and if such day is not a Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent shall determine the Index Ending Level for the Valuation Date on such date in accordance with the formula for and method of calculating the Index Ending Level last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, the Calculation Agent’s good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth scheduled Trading Day of each security most recently constituting the Index.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things the Index Ending Level, the Index Return and the Payment at Maturity, if any. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event or a discontinuation of the Index, and whether there has been a material change in the method of calculation of the Index. All calculations, determinations or adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and on the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Discontinuation of the Index; Alteration of Method of Calculation

accordance with the formula for and method of calculating the Index or Successor Index, as applicable, last in effect on the date prior to such discontinuation or failure to calculate or publish an Index Closing Level for the Index or Successor Index, as applicable, using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation) at the close of the principal trading session on such date of each security most recently included in the Index or Successor Index, as applicable.

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.06 7 dex406.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.06

LEHMAN BROTHERS HOLDINGS INC.

16.55% Reverse Exchangeable Notes Linked to the Least Performing Common Stock in a Basket of Common Stocks due April 30, 2008


Number R-1		$2,154,000
ISIN US5249083R96		CUSIP 5249083R9

See Reverse for Certain Definitions

LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter called the “Company”), for value received, hereby promises to pay to CEDE & CO. or registered assigns, at the office or agency of the Company in the Borough of Manhattan, The City of New York, on the Maturity Date, in such coin or currency of the United States of America at the time of payment shall be legal tender for the payment of public and private debts, for each $1,000 principal amount of the Securities represented hereby, an amount equal to the Payment at Maturity and to make coupon payments on the principal amount hereof, as provided below under “Coupon Payments.”

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as 16.55% Reverse Exchangeable Notes Linked to the Least Performing Common Stock in a Basket of Common Stocks Due April 30, 2008 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

The Payment at Maturity and the amount to be paid on each Coupon Payment Date, at the request of the Trustee, shall be determined by the Calculation Agent pursuant to the Calculation Agency Agreement. The Trustee shall fully rely on the determination by the Calculation Agent of the Payment at Maturity and the amount to be paid on each Coupon Payment Date and shall have no duty to make any such determination. The Calculation Agent will provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, of the Payment at Maturity and the amount to be paid on each Coupon Payment Date on or prior to 11:00 a.m. on the Business Day preceding the Maturity Date and each Coupon Payment Date.

All calculations with respect to the Initial Share Prices, the Prices or Closing Prices, as applicable, of the Reference Stocks during the Monitoring Period, the Final Share Prices and the Payment at Maturity will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated as though the date of acceleration were the Maturity Date, and the third Business Day immediately preceding the date of acceleration were the Observation Date, plus, if applicable, any accrued and unpaid coupon payments on the Securities. Upon any acceleration of the Securities, any coupon payment will be calculated on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed from and including the previous Coupon Payment Date for which a coupon payment was made. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $1,000 and any whole multiples of $1,000.

or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a financial contract, rather than as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Basket” shall mean the basket initially composed of the common stocks of Arch Coal, Inc. (NYSE: ACI), Goldcorp, Inc. (NYSE: GG) and Alcoa Inc. (NYSE: AA) (each, a “Reference Stock” and, collectively, the “Reference Stocks”). Any Reference Stock issuer may be changed in certain circumstances, as described below under “Anti-dilution Adjustments—Reorganization Events.”

“Cash Value” shall mean the amount in cash equal to the product of (1) $1,000 divided by the Initial Share Price of the Least Performing Reference Stock and (2) the Final Share Price of the Least Performing Reference Stock.

“Closing Price” of one share of each Reference Stock (or one unit of any other security for which a Closing Price must be determined) on any Trading Day means:

•

if such Reference Stock (or any such other security) is listed or admitted to trading on a national securities exchange, the last reported sale price, regular way, of the principal trading session on such day on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on which such Reference Stock (or any such other security) is listed or admitted to trading,

•

if such Reference Stock (or any such other security) is listed or admitted to trading on any national securities exchange but the last reported sale price is not available pursuant to the preceding bullet point, the last reported sale price of the principal trading session on the over-the-counter market as reported on the OTC Bulletin Board Service (the “OTC Bulletin Board”) operated by the Financial Industry Regulatory Authority, Inc. on such day;

•

if such Reference Stock (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin Board, the last reported sale price of the principal trading session on the OTC Bulletin Board on such day; or

•

if, because of a Market Disruption Event or otherwise, the last reported sale price for such Reference Stock (or any such other security) is not available pursuant to the preceding bullet points, the mean, as determined by the Calculation Agent, of the bid prices for such Reference Stock (or any such other security) obtained from as many recognized dealers in such security, but not exceeding three, as will make such bid prices available to the Calculation Agent. Bids of any of the Company’s affiliates may be included in the calculation of such mean, but only to the extent that any such bid is not the highest or the lowest of the bids obtained.

The term OTC Bulletin Board will include any successor service thereto.

“Company” shall have the meaning set forth on the face of this Security.

“Coupon Payment Date” shall mean the last day of each month, commencing on November 30, 2007 to, and including, the Maturity Date. If any Coupon Payment Date falls on a day that is not a Business Day, then any payment required to be made on such Coupon Payment Date will instead be made on the first preceding day that is a Business Day; provided, however, that the final coupon payment will be made with the Payment at Maturity.

“Coupon Period” is the period beginning on, and including, the issue date of the Securities and ending on, but excluding, the first Coupon Payment Date, and each successive period beginning on, and including, a Coupon Payment Date and ending on, but excluding, the next succeeding Coupon Payment Date.

“Coupon Rate” shall mean 16.55% per annum.

“Final Share Price” for each Reference Stock shall equal the Closing Price of the Reference Stock on the Observation Date.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Initial Share Price” for each Reference Stock shall equal the Closing Price of such Reference Stock on the Pricing Date, divided by the Stock Adjustment Factor for such Reference Stock. The Initial Share Price of each Reference Stock shall initially be as follows:


Reference Stock	Initial Share Price
Arch Coal, Inc.	$	39.33
Goldcorp, Inc.	$	32.30
Alcoa Inc.	$	38.39

“Least Performing Reference Stock” shall mean the Reference Stock with the lowest value of all the Reference Stocks included in the Basket, with value calculated as the product of (i) $1,000 divided by the Initial Share Price for such Reference Stock times (ii) the Final Share Price for such Reference Stock.

“Market Disruption Event” means, with respect to each Reference Stock (or any security for which a Closing Price must be determined):

(1) the occurrence or existence of a suspension, absence or material limitation of trading of such Reference Stock (or such security) on the primary market for such Reference Stock (or such security) at any time during the one hour period preceding the close of the principal trading session in such market;

(2) a breakdown or failure in the price and trade reporting systems of the primary market for such Reference Stock (or such security) as a result of which the reported trading prices for such Reference Stock (or such security) during the last one hour period preceding the close of the principal trading session in such market are materially inaccurate;

(3) the occurrence or existence of a suspension, absence or material limitation of trading on the primary market for trading in futures or options contracts related to such Reference Stock (or such security), if available, at any time during the last one hour period preceding the close of the principal trading session in the applicable market; or

(4) a decision to permanently discontinue trading in the relevant futures or options contracts,

in each case as determined by the Calculation Agent in its sole discretion.

For the purpose of determining whether a Market Disruption Event has occurred:

(2) limitations pursuant to the rules of any Relevant Exchange similar to NYSE Rule 80B (or any applicable rule or regulation enacted or promulgated by the NYSE, any other U.S. self-regulatory organization, the Securities Exchange Commission or any other relevant authority of scope similar to NYSE Rule 80B as determined by the Calculation Agent in its sole discretion) on trading during significant market fluctuations will constitute a suspension, absence or material limitation of trading,

(3) a suspension of trading in futures or options contracts on such Reference Stock (or such security) by the primary securities market trading in such contracts, if available, by reason of:

•

a price change exceeding limits set by such securities exchange or market,

•

an imbalance of orders relating to such contracts, or

•

a disparity in bid and ask quotes relating to such contracts

will, in each such case, constitute a suspension, absence or material limitation of trading in futures or options contracts related to such Reference Stock (or such security); and

(4) a “suspension, absence or material limitation of trading” on the primary securities market on which futures or options contracts related to such Reference Stock (or such other security) are traded will not include any time when such securities market is itself closed for trading under ordinary circumstances.

“Maturity Date” shall mean April 30, 2008, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity will be made on the next succeeding Business Day following April 30, 2008; provided, that if due to a non-Trading Day or a Market Disruption Event, the Observation Date is postponed so that it falls less than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Observation Date, as postponed.

“Monitoring Period” shall mean the period from, but excluding, the Pricing Date to, and including, the Observation Date.

“NYSE” shall mean The New York Stock Exchange, Inc.

“Observation Date” shall mean April 25, 2008, provided, however, that if an Observation Date is not a Trading Day or if there is a Market Disruption Event on such day with respect to a Reference Stock, the Calculation Agent will: (1) with respect to each Reference Stock for which such day is a Trading Day and for which a Market Disruption Event has not occurred, determine the Final Share Price of the Reference Stock by reference to the Final Share Price of the Reference Stock on that Trading Day; and (2) with respect to each Reference Stock for which such day is not a Trading Day or for which a Market Disruption Event has occurred, determine the Final Share Price of the Reference Stock by reference to the Final Share Price of the Reference Stock on the next Trading Day for the Reference Stock on which there is not a Market Disruption Event; provided, however, if a Market Disruption Event with respect to the Reference Stock occurs on each of the eight Trading Days following the originally scheduled Observation Date, then the Calculation Agent shall determine the Final Share Price of the Reference Stock based upon the mean, as determined by the Calculation Agent, of three bid prices for the Reference Stock obtained from recognized dealers in such security on that eighth Trading Day.

“Payment at Maturity”, as calculated by the Calculation Agent, for each $1,000 principal amount Security shall equal $1,000 plus any accrued and unpaid coupon payments unless:

(i) the Final Share Price of any Reference Stock is less than its Initial Share Price; and

(ii) a Trigger Event has occurred.

If the conditions described in (i) and (ii) are both satisfied, the Payment at Maturity shall be, instead of $1,000 for each $1,000 principal amount Security, the number of shares of the Least Performing Reference Stock equal to the Physical Delivery Amount plus any cash that the Company will pay in lieu of fractional shares in an amount equal to the product of the Final Share Price of the Least Performing Reference Stock multiplied by such fractional amount, plus any accrued and unpaid coupon payments. However, the Company may elect, in lieu of delivering the Physical Delivery Amount, to pay the Cash Value of the Physical Delivery Amount.

The Company may designate any of its affiliates to deliver any shares of the Least Performing Reference Stock pursuant to the terms of the Securities and the Company shall be discharged of any obligation to deliver such shares of the Least Performing Reference Stock to the extent of such performance by its affiliates.

“Physical Delivery Amount” shall mean the number of shares of the Least Performing Reference Stock, per $1,000 principal amount of the Securities, equal to $1,000 divided by the Initial Share Price of the Least Performing Reference Stock.

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Price” of one share of each Reference Stock (or one unit of any other security for which a Price must be determined) on any Trading Day means:

•

if such Reference Stock (or any such other security) is listed or admitted to trading on a national securities exchange, the highest intraday bid price on such day on the principal United States securities exchange registered under the Exchange Act, on which such Reference Stock (or any such other security) is listed or admitted to trading;

•

if such Reference Stock (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin Board, the highest reported bid price reported on the OTC Bulletin Board on such day; or

•

if a bid price is not available pursuant to the preceding bullet points, the mean, as determined by the Calculation Agent, of the bid prices for such Reference Stock (or any such other security) obtained from as many recognized dealers in such security, but not exceeding three, as will make such bid prices available to the Calculation Agent. Bids of any of the Company’s affiliates may be included in the calculation of such mean, but only to the extent that any such bid is not the highest of the bids obtained.

The term OTC Bulletin Board will include any successor service thereto.

“Pricing Date” shall mean October 25, 2007.

“Reference Stock” shall be as defined under “Basket.”

“Relevant Exchange” for each Reference Stock shall mean the primary U.S. exchange or market for trading for such Reference Stock.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Security” shall have the meaning set forth on the face of this Security.

“Stock Adjustment Factor” for each Reference Stock shall initially equal 1.0, subject to adjustment under certain circumstances as described under “Anti-dilution Adjustments” below.

“Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted on the NYSE, the American Stock Exchange (the “AMEX”), the Nasdaq Global Select Market, the Nasdaq Global Market, the Chicago Mercantile Inc., the Chicago Board Options Exchange, Incorporated and in the over-the-counter market for equity securities in the United States.

“Trigger Event” shall occur if, on any Trading Day during the Monitoring Period, the Closing Price of any Reference Stock is below such Reference Stock’s Trigger Price.

“Trigger Price” for each Reference Stock shall equal a dollar amount that represents 60% of the applicable Initial Share Price of such Reference Stock in effect on such Trading Day. The Trigger Price of each Reference Stock shall initially be as follows:


Issuer	Trigger Price
Arch Coal, Inc.	$	23.598
Goldcorp, Inc.	$	19.380
Alcoa Inc.	$	23.034

“Trustee” shall have the meaning set forth on the reverse of this Security.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things, the Initial Share Price of each Reference Stock, the Trigger Price applicable to each of the Reference Stocks, the Price of each Reference Stock quoted on the applicable Relevant Exchange at any time or the Closing Price of each Reference Stock on any Trading Day, as applicable, in each case during the Monitoring Period, the Stock Adjustment Factor of each Reference Stock, anti-dilution adjustments and reorganization events, the selection of any Successor Reference Stock, the Final Share Price of each Reference Stock, the amount of any coupon payment payable on any Coupon Payment Date and the Payment at Maturity, as well as, in determining whether a Trigger Event has occurred,

whether and how much the Price or Closing Price, as applicable, of each Reference Stock during the Monitoring Period and the Final Share Price of each Reference Stock have declined from the relevant Initial Share Price. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event and whether a day is a Coupon Payment Date. All determinations made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Anti-dilution Adjustments

The Stock Adjustment Factor for each Reference Stock is subject to adjustment by the Calculation Agent as a result of the anti-dilution and reorganization adjustments described in this section.

No adjustments to any Stock Adjustment Factor will be required unless such Stock Adjustment Factor adjustment would require a change of at least 0.1% in such Stock Adjustment Factor then in effect. A Stock Adjustment Factor resulting from any of the adjustments specified in this section will be rounded to the nearest one ten-thousandth with five one hundred-thousandths being rounded upward. The Calculation Agent will not be required to make any adjustments to the Stock Adjustment Factor for any Reference Stock after the close of business on the Business Day immediately preceding the Maturity Date.

No adjustments to the Stock Adjustment Factor for any Reference Stock will be required other than those specified below.

The Calculation Agent shall be solely responsible for (1) the determination and calculation of any adjustments to the Stock Adjustment Factors and of any related determinations and calculations with respect to any distributions of stock, other securities or other property or assets, including cash, in connection with any corporate event described in this section, and (2) the determination of any Successor Reference Stock, and its determinations and calculations shall be conclusive absent manifest error.

The Company will, within ten Business Days following the occurrence of an event that requires an adjustment to any Stock Adjustment Factor (other than as a result of a Reorganization Event as described below), or if the Company is not aware of this occurrence, as soon as practicable after becoming so aware, provide notice to the Calculation Agent, which shall provide written notice to the trustee, which shall provide notice to Holders of the occurrence of this event and, if applicable, a statement in reasonable detail setting forth such adjusted Stock Adjustment Factor.

Stock Splits and Reverse Stock Splits

If a Reference Stock is subject to a stock split or reverse stock split, then once any split has become effective, the Stock Adjustment Factor relating to such Reference Stock will be adjusted so that the new Stock Adjustment Factor shall equal the product of:

•

the prior Stock Adjustment Factor for such Reference Stock, and

•

the number of shares which a holder of one share of such Reference Stock before the effective date of that stock split or reverse stock split would have owned or been entitled to receive immediately following the applicable effective date.

Stock Dividends or Distributions

If a Reference Stock is subject to a (i) stock dividend, i.e., issuance of additional shares of such Reference Stock, that is given ratably to all holders of shares of such Reference Stock, or (ii) distribution of shares of such Reference Stock as a result of the triggering of any provision of the corporate charter of the issuer of such Reference Stock, then, once the dividend has become effective and the shares are trading ex-dividend, the Stock Adjustment Factor for such Reference Stock will be adjusted so that the new Stock Adjustment Factor for such Reference Stock shall equal the prior Stock Adjustment Factor for such Reference Stock plus the product of:

•

the prior Stock Adjustment Factor for such Reference Stock, and

•

the number of additional shares issued in the stock dividend with respect to one share of such Reference Stock.

Non-cash Distributions

If the issuer of a Reference Stock distributes shares of capital stock, evidences of indebtedness or other assets or property of the issuer of such Reference Stock to holders of such Reference Stock (other than (i) dividends, distributions and rights or warrants referred to under “—Stock Splits and Reverse Stock Splits” and “—Stock Dividends or Distributions” above and (ii) cash distributions or dividends referred under “—Cash Dividends or Distributions” below), then, once the distribution has become effective and the shares are trading ex-dividend, the Stock Adjustment Factor for such Reference Stock will be adjusted so that the new Stock Adjustment Factor for such Reference Stock shall equal the product of:

•

the prior Stock Adjustment Factor for such Reference Stock, and

•

a fraction, the numerator of which is the Current Market Price of such Reference Stock and the denominator of which is the amount by which such Current Market Price exceeds the Fair Market Value of such distribution; provided that if the Fair Market Value of such distribution equals or exceeds the Current Market Price of such Reference Stock, the Calculation Agent shall determine in its sole discretion the appropriate adjustment to the Stock Adjustment Factor for such Reference Stock.

The “Current Market Price” of a Reference Stock means the arithmetic average of the Closing Prices of such Reference Stock for the ten Trading Days prior to the Trading Day immediately preceding the ex-dividend date of the distribution requiring an adjustment to the Stock Adjustment Factor for such Reference Stock.

The “ex-dividend date” shall mean the first Trading Day on which transactions in such Reference Stock trade on the Relevant Exchange without the right to receive that distribution.

The “Fair Market Value” of any such distribution means the value of such distribution on the ex-dividend date for such distribution, as determined by the Calculation Agent. If such distribution consists of property traded on the ex-dividend date on a U.S. national securities exchange, the Fair Market Value will equal the Closing Price of such distributed property on such ex-dividend date.

Notwithstanding the foregoing, a distribution on a Reference Stock described in clause (a), (d) or (e) of the section entitled “—Reorganization Events” below that also would require an adjustment under this section shall not cause an adjustment to the Stock Adjustment Factor of such Reference Stock and shall only be treated as a Reorganization Event (as defined below) pursuant to clause (a), (d) or (e) under the section entitled “—Reorganization Events.” A distribution on a Reference Stock described in the section entitled “—Issuance of Transferable Rights or Warrants” that also would require an adjustment under this section shall only cause an adjustment pursuant to the section entitled “—Issuance of Transferable Rights or Warrants.”

Cash Dividends or Distributions

If the issuer of a Reference Stock pays dividends or makes other distributions consisting exclusively of cash to all holders of such Reference Stock during any fiscal quarter during the term of the notes, in an aggregate amount that, together with other such dividends or distributions made during such quarterly fiscal period, exceeds the Dividend Threshold, then, once the dividend or distribution has become effective and the shares are trading ex-dividend, the Stock Adjustment Factor for such Reference Stock will be adjusted so that the new Stock Adjustment Factor for such Reference Stock shall equal the product of:

•

the prior Stock Adjustment Factor for such Reference Stock, and

•

a fraction, the numerator of which is the Current Market Price of such Reference Stock and the denominator of which is the amount by which such Current Market Price exceeds the amount in cash per share the issuer of such Reference Stock distributes to holders of such Reference Stock in excess of the Dividend Threshold; provided that if the amount in cash per share of such dividend or distribution equals or exceeds the Current Market Price of such Reference Stock, the Calculation Agent shall determine in its sole discretion the appropriate adjustment to the Stock Adjustment Factor for such Reference Stock.

“Dividend Threshold” shall mean the amount of any cash dividend or cash distribution distributed per share of a Reference Stock that exceeds the immediately preceding cash dividend or other cash distribution, if any, per share of such Reference Stock by more than 10% of the Closing Price of such Reference Stock on the Trading Day immediately preceding the ex-dividend date.

Issuance of Transferable Rights or Warrants

If the issuer of a Reference Stock issues transferable rights or warrants to all holders of such Reference Stock to subscribe for or purchase such Reference Stock, including new or existing rights to purchase such Reference Stock at an exercise price per share less than the closing price of such Reference Stock on both (i) the date the exercise price of such rights or

warrants is determined and (ii) the expiration date of such rights and warrants pursuant to a shareholder’s rights plan or arrangement, and if the expiration date of such rights or warrants precedes the Maturity Date, then the Stock Adjustment Factor for such Reference Stock will be adjusted on the business day immediately following the issuance of such transferable rights or warrants so that the new Stock Adjustment Factor for such Reference Stock shall equal the prior Stock Adjustment Factor for such Reference Stock plus the product of:

•

the prior Stock Adjustment Factor for such Reference Stock, and

•

the number of shares of such Reference Stock that can be purchased with the cash value of such warrants or rights distributed on one share of such Reference Stock.

The number of shares that can be purchased will be based on the Closing Price of such Reference Stock on the date the new Stock Adjustment Factor for such Reference Stock is determined. The cash value of such warrants or rights, if the warrants or rights are traded on a U.S. national securities exchange, will equal the Closing Price of such warrant or right, or, if the warrants or rights are not traded on a U.S. national securities exchange, will be determined by the Calculation Agent and will equal the average (mean) of the bid prices obtained from three dealers at 3:00 p.m., New York City time, on the date the new Stock Adjustment Factor for such Reference Stock is determined, provided that if only two such bid prices are available, then the cash value of such warrants or rights will equal the average (mean) of such bids and if only one such bid is available, then the cash value of such warrants or rights will equal such bid.

Reorganization Events

If prior to the maturity date,

(a)

there occurs any reclassification or change of a Reference Stock, including, without limitation, as a result of the issuance of tracking stock by the issuer of such Reference Stock,

(b)

the issuer of a Reference Stock, or any surviving entity or subsequent surviving entity of the issuer of a Reference Stock (a “Successor Entity”), has been subject to a merger, combination or consolidation and is not the surviving entity,

(c)

any statutory exchange of securities of the issuer of a Reference Stock or any Successor Entity with another corporation occurs, other than pursuant to clause (b) above,

(d)

the issuer of a Reference Stock is liquidated or is subject to a proceeding under any applicable bankruptcy, insolvency or other similar law,

(e)

the issuer of a Reference Stock issues to all of its shareholders equity securities of an issuer other than the issuer of such Reference Stock, other than in a transaction described in clauses (b), (c) or (d) above (a “Spin-off Event”), or

(f)

a tender or exchange offer or going-private transaction is commenced for all the outstanding shares of the issuer of a Reference Stock and is consummated for

all or substantially all of such shares, as determined by the Calculation Agent in its sole discretion (an event in clauses (a) through (f), a “Reorganization Event”),

then, instead of adjusting the Stock Adjustment Factor for such Reference Stock, the Calculation Agent, in its sole discretion without consideration for the interests of investors, shall either:

(A) determine a Successor Reference Stock (as defined below) to such Reference Stock that experiences any such Reorganization Event (the “Original Reference Stock”) after the close of the principal trading session on the Trading Day immediately prior to the effective date of such Reorganization Event in accordance with the following paragraph (each successor reference stock as so determined, a “Successor Reference Stock” and such successor reference stock issuer, a “Successor Reference Stock Issuer”); or

(B) deem the Closing Price and the Stock Adjustment Factor of such Original Reference Stock on the Trading Day immediately prior to the effective date of such Reorganization Event to be the Closing Price (in the case of daily monitoring) or Price (in the case of continuous monitoring) and Stock Adjustment Factor of such Original Reference Stock on every remaining Trading Day to, and including, the last Trading Day in the Monitoring Period.

Upon the determination by the Calculation Agent of any Successor Reference Stock pursuant to clause (A) of the preceding sentence, references in this Security to such “Reference Stock” shall no longer be deemed to refer to the Original Reference Stock and shall be deemed instead to refer to any such Successor Reference Stock for all purposes, and references in Security to “issuer” of the Original Reference Stock shall be deemed to be to any such Successor Reference Stock Issuer.

Upon the selection of any Successor Reference Stock by the Calculation Agent pursuant to clause (A) of the preceding sentence:

(i)

the Initial Share Price for such Successor Reference Stock will be the Closing Price of such Successor Reference Stock on the Trading Day immediately following the effective date of the Reorganization Event multiplied by the Initial Share Price of the Original Reference Stock and divided by the Closing Price of the Original Reference Stock on the Trading Day immediately prior to the effective date of such Reorganization Event;

(ii)

the Trigger Price for such Successor Reference Stock will be an amount that represents the same percentage of the Initial Share Price for such Successor Reference Stock as the percentage of the Initial Share Price of the Original Reference Stock represented by the Trigger Price of the Original Reference Stock, as determined by the Calculation Agent; and

(iii)

the Stock Adjustment Factor for such Successor Reference Stock shall be 1.0, subject to adjustment for certain corporate events related to such Successor Reference Stock in accordance with “—Anti-dilution Adjustments.”

For the avoidance of doubt, in the case of an issuance by the issuer of a Reference Stock to all of its shareholders of equity securities of an issuer other than the issuer of such Reference Stock as described in clause (e) above, if the Closing Price of such Reference Stock as of the effective date of such issuance does not increase or decline by at least 50% from the Initial Share Price of such Reference Stock, such issuance shall not constitute a Reorganization Event and no adjustments shall be made under this “—Reorganization Events” section. Instead, such Reference Stock will be subject to adjustments as described under “—Non-cash Distributions” above.

The “Successor Reference Stock” will be the common stock of a U.S. company selected by the Calculation Agent from among the common stocks of U.S. companies then registered to trade on the NYSE, Nasdaq Global Select Market or Nasdaq Global Market that is not already a Reference Stock, with the same primary Standard Industrial Classification Code (“SIC Code”) as the Original Reference Stock that, in the sole discretion of the Calculation Agent, is the most comparable to the Original Reference Stock, taking into account such factors as the Calculation Agent deems relevant, including, without limitation, market capitalization, dividend history and stock price volatility; provided, however, that a Successor Reference Stock will not be any stock that is subject to a trading restriction under the trading restriction policies of the Company or any of its affiliates that would materially limit the ability of the Company or any of its affiliates to hedge the notes with respect to such stock (a “Hedging Restriction”); provided further that if a Successor Reference Stock cannot be identified as set forth above for which a Hedging Restriction does not exist, the Successor Reference Stock will be selected by the Calculation Agent from the largest market capitalization stock of a U.S. company within the same Division and Major Group classification (as defined by the Office of Management and Budget) as the primary SIC Code for the Original Reference Stock.

Following a Reorganization Event in which a Successor Reference Stock is selected, the Stock Adjustment Factor of the Successor Reference Stock will be subject to adjustment as described above under this “Anti-dilution Adjustments” section, and, if no Successor Reference Stock is selected, the Original Reference Stock Issuer will, upon a subsequent Reorganization Event, be subject to the election by the Calculation Agent described in clause (A) and (B) of the first paragraph under “—Anti-dilution Adjustments—Reorganization Events.”

The Company will, or will cause the Calculation Agent to, provide written notice to the Trustee, to the Company and to The Depository Trust Company (“DTC”) within thirty business days immediately following the effective date of any Reorganization Event, of the Successor Reference Stock Issuer, the Successor Reference Stock, the Trigger Price and the Initial Share Price for such Successor Reference Stock, as well as the Original Reference Stock so replaced. The Company expects that such notice will be passed on to Holders in accordance with the standard rules and procedures of DTC and its direct and indirect participants.

Coupon Payments

For each Coupon Period for each $1,000 principal amount Security, the coupon payment for each Coupon Period will be calculated as follows:

$1,000 x Coupon Rate x (number of days in the Coupon Period / 360),

where the number of days will be calculated on the basis of a year of 360 days with twelve months of thirty days each.

Coupon payments will be made at the Coupon Rate. Coupon payments will accrue from, and including, the issue date of the Securities to, but excluding, the Maturity Date. Coupon payments will be paid in arrears on each Coupon Payment Date to, and including, the Maturity Date, to the Holders at the close of business on the date 15 calendar days prior to that Coupon Payment Date, whether or not such fifteenth calendar day is a Business Day. If the Maturity Date is adjusted as the result of a Market Disruption Event, the coupon payment due on the Maturity Date will be made on the Maturity Date as adjusted, with the same force and effect as if the Maturity Date had not been adjusted, but no additional coupon payment will accrue or be payable as a result of the delayed payment.

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.07 8 dex407.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.07

LEHMAN BROTHERS HOLDINGS INC.

Return Optimization Securities Linked to the S&P 500^® Index Due April 30, 2009


Number R-1		$52,814,490
ISIN US52522L3353		CUSIP 52522L335

See Reverse for Certain Definitions

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A. as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as Return Optimization Securities Linked to the S&P 500^® Index Due April 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

All calculations with respect to the Index Ending Level and the Index Return or any Index Closing Level will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the payment per $10 principal amount Security at maturity will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a cash-settled financial contract, rather than as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Company” shall have the meaning set forth on the face of this Security.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the S&P 500^® Index, as calculated, published and disseminated by S&P.

“Index Ending Level” shall equal the Index Closing Level on the Valuation Date.

“Index Return”, as calculated by the Calculation Agent, is calculated as follows:

Index Ending Level — Index Starting Level

Index Starting Level

“Index Sponsor”, with respect to the Index, shall be Standard & Poor’s (“S&P”), a division of the McGraw-Hill Companies, Inc. The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Starting Level” shall equal 1,535.28.

“Leverage Factor” shall equal 3.

“Market Disruption Event”, with respect to the Index or any Successor Index, shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

“Maturity Date” shall mean April 30, 2009, unless that day is not a Business Day, in which case the amount equal to the Payment at Maturity that would otherwise be due on the scheduled Maturity Date will instead be due on the next succeeding Business Day following such scheduled Maturity Date, with the same effect as if paid on the scheduled Maturity Date; provided that if due to a non-Trading Day or a Market Disruption Event, the Valuation Date is postponed so that it falls less than three Business Days prior to the scheduled Maturity Date, the Maturity Date will be the third Business Day following the Valuation Date, as postponed.

“Payment at Maturity”, as calculated by the Calculation Agent for each $10 principal amount Security, shall equal:

•

If the Index Ending Level is above the Index Starting Level, the lesser of:

(1) $10 + ($10 × Index Return × Leverage Factor); and

(2) $12.50

•

If the Index Ending Level is equal to or below the Index Starting Level, $10 + ($10 × Index Return).

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Successor Index” shall have the meaning specified under “Discontinuation of the Index; Alteration of Method of Calculation”.

“Trustee” shall have the meaning set forth on the reverse of this Security.

eighth scheduled Trading Day after the originally scheduled Valuation Date, and if such day is not a Trading Day, or if there is a Market Disruption Event on such date, the Calculation Agent shall determine the Index Ending Level for the Valuation Date on such date in accordance with the formula for and method of calculating the Index Ending Level last in effect prior to commencement of the Market Disruption Event (or prior to the non-Trading Day), using the Closing Price (or, if trading in the relevant securities has been materially suspended or materially limited, the Calculation Agent’s good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation or non-Trading Day) on such eighth scheduled Trading Day of each security most recently constituting the Index.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

The Calculation Agent will determine, among other things, the Index Closing Level on each Trading Day, the Index Ending Level, the Index Return and the Payment at Maturity, if any. In addition, the Calculation Agent will determine whether there has been a Market Disruption Event or a discontinuation of the Index, and whether there has been a material change in the method of calculation of the Index. All calculations, determinations or adjustments made by the Calculation Agent will be at the sole discretion of the Calculation Agent and will, in the absence of manifest error, be conclusive for all purposes and binding on Holders and on the Company. The Company may appoint a different Calculation Agent from time to time after the date of the original issue of the Securities without the Holders’ consent and without notifying Holders.

Discontinuation of the Index; Alteration of Method of Calculation

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.08 9 dex408.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.08

LEHMAN BROTHERS HOLDINGS INC.

Return Optimization Securities Linked to the Nikkei 225^SM Index Due April 30, 2009


Number R-1		$2,666,260
ISIN US52522L3270		CUSIP 52522L327

See Reverse for Certain Definitions

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

“Nikkei” and “Nikkei 225” are the service marks of Nikkei Inc. (“Nikkei”) and have been licensed for use by Lehman Brothers Inc. and sub-licensed for use by the Company. The Securities, which are linked to the performance of the Nikkei 225^SM Index, are not sponsored, endorsed, sold or promoted by Nikkei, and Nikkei makes no representation regarding the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as Return Optimization Securities Linked to the Nikkei 225^SM Index Due April 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a cash-settled financial contract, rather than as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Company” shall have the meaning set forth on the face of this Security.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the Nikkei 225^SM Index, as calculated, published and disseminated by Nikkei.

“Index Ending Level” shall equal the Index Closing Level on the Valuation Date.

“Index Return”, as calculated by the Calculation Agent, is calculated as follows:

Index Ending Level — Index Starting Level

Index Starting Level

“Index Sponsor”, with respect to the Index, shall be Nikkei Inc. (“Nikkei”). The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Starting Level” shall equal 16,505.63.

“Leverage Factor” shall equal 5.

“Market Disruption Event”, with respect to the Index or any Successor Index, shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

“Payment at Maturity”, as calculated by the Calculation Agent for each $10 principal amount Security, shall equal:

•

If the Index Ending Level is above the Index Starting Level, the lesser of:

(1) $10 + ($10 × Index Return × Leverage Factor); and

(2) $13.35

•

If the Index Ending Level is equal to or below the Index Starting Level, $10 + ($10 × Index Return).

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Successor Index” shall have the meaning specified under “Discontinuation of the Index; Alteration of Method of Calculation”.

“Trustee” shall have the meaning set forth on the reverse of this Security.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

Discontinuation of the Index; Alteration of Method of Calculation

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.09 10 dex409.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.09

LEHMAN BROTHERS HOLDINGS INC.

Return Optimization Securities Linked to the Nasdaq-100 Index^® Due April 30, 2009


Number R-1		$11,876,070
ISIN US52522L3197		CUSIP 52522L319

See Reverse for Certain Definitions

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

“Nasdaq”, “Nasdaq-100 Index” and “Nasdaq-100 Index” are trademarks of The Nasdaq Stock Market, Inc. and have been licensed for use by Lehman Brothers Inc. and sub-licensed for use by the Company. The Securities, which are linked to the performance of the Nasdaq-100 Index^®, are not sponsored, endorsed, sold or promoted by Nasdaq, and Nasdaq makes no representation regarding the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as Return Optimization Securities Linked to the Nasdaq-100 Index^® Due April 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

All calculations with respect to the Index Ending Level and the Index Return or any Index Closing Level will be rounded to the nearest one hundred-thousandth, with five one-millionths rounded upward (e.g., .876545 would be rounded to .87655); all dollar amounts related to determination of the payment per $10 principal amount Security at maturity will be rounded to the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar amounts paid on the aggregate principal amount of Securities per Holder will be rounded to the nearest cent, with one-half cent rounded upward.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a cash-settled financial contract, rather than as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Company” shall have the meaning set forth on the face of this Security.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the Nasdaq-100 Index^®, as calculated, published and disseminated by Nasdaq.

“Index Ending Level” shall equal the Index Closing Level on the Valuation Date.

“Index Return”, as calculated by the Calculation Agent, is calculated as follows:

Index Ending Level — Index Starting Level

Index Starting Level

“Index Sponsor”, with respect to the Index, shall be The Nasdaq Stock Market, Inc. (“Nasdaq”). The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Starting Level” shall equal 2,194.59.

“Leverage Factor” shall equal 3.

“Market Disruption Event”, with respect to the Index or any Successor Index, shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

“Payment at Maturity”, as calculated by the Calculation Agent for each $10 principal amount Security, shall equal:

•

If the Index Ending Level is above the Index Starting Level, the lesser of:

(1) $10 + ($10 × Index Return × Leverage Factor); and

(2) $12.74

•

If the Index Ending Level is equal to or below the Index Starting Level, $10 + ($10 × Index Return).

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Successor Index” shall have the meaning specified under “Discontinuation of the Index; Alteration of Method of Calculation”.

“Trustee” shall have the meaning set forth on the reverse of this Security.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

Discontinuation of the Index; Alteration of Method of Calculation

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

EX-4.10 11 dex410.htm FORM OF SENIOR DEBT SECURITY - MEDIUM TERM NOTES form of senior debt security - medium term notes

Exhibit 4.10

LEHMAN BROTHERS HOLDINGS INC.

Return Optimization Securities Linked to the Dow Jones EURO STOXX 50^® Index Due April 30, 2009


Number R-1		$7,830,660
ISIN US52522L3015		CUSIP 52522L301

See Reverse for Certain Definitions

Any amount payable on the Maturity Date hereon will be paid only upon presentation and surrender of this Security.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS SECURITY SET FORTH ON THE REVERSE HEREOF WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

“Dow Jones EURO STOXX 50^®” and “STOXX^®” are trademarks of STOXX Limited and have been licensed for use by Lehman Brothers Inc. and sub-licensed for use by the Company. The Securities, which are linked to the performance of the Dow Jones EURO STOXX 50^® Index, are not sponsored, endorsed, sold or promoted by STOXX Limited, and STOXX Limited makes no representation regarding the advisability of investing in the Securities. This Security shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to on the reverse hereof.


Dated: October 31, 2007	LEHMAN BROTHERS HOLDINGS INC.

[SEAL]	By:
		Vice President

	Attest:
		Assistant Secretary

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.


CITIBANK, N.A.
as Trustee

By:
		Authorized Officer

Reverse of Security

This Security is one of a duly authorized series of Securities of the Company designated as Return Optimization Securities Linked to the Dow Jones EURO STOXX 50^® Index Due April 30, 2009 (herein called the “Securities”). The Company may, without the consent of the holders of the Securities, create and issue additional securities ranking equally with the Securities and otherwise similar in all respects so that such additional securities shall be consolidated and form a single series with the Securities; provided that no additional securities can be issued if an Event of Default has occurred with respect to the Securities. This series of Securities is one of an indefinite number of series of debt securities of the Company, issued and to be issued under an indenture, dated as of September 1, 1987, as amended (herein called the “Indenture”), duly executed and delivered by the Company and Citibank, N.A., as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities.

This Security is not subject to any sinking fund.

If an Event of Default with respect to the Securities shall occur and be continuing, the amounts payable on all of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The amount payable to the Holder hereof upon any acceleration permitted under the Indenture will be equal to the Payment at Maturity calculated as though the date of acceleration were the Maturity Date and the third Business Day immediately preceding the date of acceleration were the Valuation Date. If the maturity of the Securities is accelerated because of an Event of Default, the Company shall, or shall cause the Calculation Agent to, provide written notice to the Trustee at its New York office, on which notice the Trustee may conclusively rely, and to The Depository Trust Company of the cash amount due with respect to the Securities as promptly as possible and in no event later than two Business Days after the date of acceleration.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than 66²/3% in aggregate principal amount of each series of Securities at the time Outstanding to be affected (each series voting as a class), evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the holders of the Securities of all such series; provided, however, that no such supplemental indenture shall, among other things, (i) change the fixed maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, if any, or reduce any premium payable on redemption, or make the principal thereof, or premium, if any, or interest thereon, if any, payable in any coin or currency other than that hereinabove provided, without the consent of the holder of each Security so affected, or (ii) change the place of payment on any Security, or impair the right to institute suit for payment on any Security, or reduce the aforesaid percentage of Securities, the holders of which are required to consent to any such supplemental indenture, without the consent of the holders of each Security so affected. It is also provided in the Indenture that, prior to any declaration accelerating the maturity of any series of Securities, the holders of a majority in aggregate principal amount of the Securities of such series Outstanding may on behalf of the holders of all the Securities of such series waive any past default or Event of Default under the Indenture with respect to such series and its consequences, except a default in the payment of interest, if any, or the principal of, or premium, if any, on any of the Securities of such series, or in the payment of any sinking fund installment or analogous obligation with respect to Securities of such series. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future holders and owners of this Security and any Securities which may be issued in exchange or substitution hereof, irrespective of whether or not any notation thereof is made upon this Security or such other Securities.

The Securities are issuable in denominations of $10 and any whole multiples of $10.

The Company intends to treat, and by purchasing this Security, the Holder agrees to treat, for all tax purposes, this Security as a cash-settled financial contract, rather than as a debt instrument.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Definitions

Set forth below are definitions of the terms used in this Security.

“Company” shall have the meaning set forth on the face of this Security.

“Holder” shall have the meaning set forth on the reverse of this Security.

“Indenture” shall have the meaning set forth on the reverse of this Security.

“Index” shall mean the Dow Jones EURO STOXX 50^® Index, as calculated, published and disseminated by STOXX Limited.

“Index Ending Level” shall equal the Index Closing Level on the Valuation Date.

“Index Return”, as calculated by the Calculation Agent, is calculated as follows:

Index Ending Level — Index Starting Level

Index Starting Level

“Index Sponsor”, with respect to the Index, shall be STOXX Limited, a joint venture between Deutsche Börse AG, Dow Jones & Company, Inc. and SWX Group. The Calculation Agent, in its sole discretion, may select a new Index Sponsor as described under “Discontinuation of the Index; Alteration of Method of Calculation.”

“Index Starting Level” shall equal 4,440.23.

“Leverage Factor” shall equal 3.

“Market Disruption Event”, with respect to the Index or any Successor Index, shall mean any of the following events has occurred on any day as determined by the Calculation Agent:

(4) a decision to permanently discontinue trading in the relevant futures or options contracts or exchange traded funds.

(1) the portion of the level of the Index attributable to that security relative to

(2) the overall level of the Index,

in each case immediately before that suspension or limitation.

For purposes of determining whether a Market Disruption Event has occurred:

“Payment at Maturity”, as calculated by the Calculation Agent for each $10 principal amount Security, shall equal:

•

If the Index Ending Level is above the Index Starting Level, the lesser of:

(1) $10 + ($10 × Index Return × Leverage Factor); and

(2) $12.70

•

If the Index Ending Level is equal to or below the Index Starting Level, $10 + ($10 × Index Return).

“Place of Payment” shall mean the place or places where the Payment at Maturity on the Securities is payable.

“Pricing Date” shall mean October 26, 2007.

“Securities” shall have the meaning set forth on the reverse of this Security.

“Successor Index” shall have the meaning specified under “Discontinuation of the Index; Alteration of Method of Calculation”.

“Trustee” shall have the meaning set forth on the reverse of this Security.

All terms used but not defined in this Security are used herein as defined in the Calculation Agency Agreement or the Indenture.

Calculation Agent

Discontinuation of the Index; Alteration of Method of Calculation

The following abbreviations, when used in the inscription on the face of the within Security, shall be construed as though they were written out in full according to applicable laws or regulations:

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(Name and Address of Assignee, including zip code, must be printed or typewritten.)

the within Security, and all rights thereunder, hereby irrevocably constituting and appointing

to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:

__________________________________________

Signature(s) Guaranteed:

__________________________

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